PowerPoint Presentation

Matt HoltDirector, Digital Strategy at OgilvyOne@MattSocial

Greater Expectations:Engaging the new retail consumer

Consumers needs arent changing.Consumer expectations are

When it comes to retail, consumer needs havent changed all that much. They still want the best products or services for them at the right place and time. They still seek a seamless experience that is consistent across touch points, whether digital or physical.What has changed are consumer expectations.The rise of same day delivery services, Uber, entertainment streaming services, and others have heightened our expectations.More than ever before, consumers are seeking instant gratification.And that demand isnt limited to products and services: its also about product discovery, information, and comparison.

Heightened consumer expectations: the factsBy some reports, customer satisfaction in the UK has plunged to its lowest point since 2010 (according to Institute of Customer Service) Basic needs arent being met:Of top 50 high street retailers in the UK40% dont have mobile optimized store locators20% dont have transactional mobile site30% dont have iOS or Android app46% dont feature responsive web design44% dont have tablet-optimised sites 2

Disneys magic brand brings the new retail experience to life

Brands are moving from marketing stunts towards innovations that improve consumer experience.

Usage of wearables predicted to double this year. Whilst Just 7% of UK adults currently own a wearable device (sports watch, fitness band, smart glasses), 1 in 5 report being extremely interested in owning.

Interest in wearables most pronounced for 25-25 age group: 26% express intent to purchase a smart watch (eMarketer)

Disney has introduced the Magic Band to its theme-park customers; its a wearable bracelet thats much more than just an admissions ticket. It allows customers to go on rides and attractions at a previously-booked time, and it can be a form of payment on various Disney properties. Aside from opening many doors for the customer, it also provides Disney a wealth of information about customer behaviour

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Disneys Magic Band

https://www.youtube.com/watch?v=2buVLVO-6F8

Use of wearables will double in 2015.

Disney has introduced the Magic Band to its theme-park customers; its a wearable bracelet thats much more than just an admissions ticket. It allows customers to go on rides and attractions at a previously-booked time, and it can be a form of payment on various Disney properties. Aside from opening many doors for the customer, it also provides Disney a wealth of information about customer behaviour

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Consumer expectations have increased in two major areasCustomer Experience

The physical and digital blur

Continuous Commerce

Commerce commerce everywhere

I am going to focus on 2 major areas today: Customer experience and commerceConsumers are expecting a seamless, consistent, and easy experienceCommerce is continuous, and more connected than ever. As consumers gain access to more information and tools, their path to purchase becomes less linear, and more lateral. What does this mean for brands? For one, they need to leverage all channels to close the gap between product discovery and purchase intent. Making the purchase process more simple and consistent demands a firm understanding of the consumer. Brands that succeed first endeavor to meet expectations, and from there, differentiate.

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The physical and digital blur

What consumers expectConsumers expect ease, simplicity and seamlessness between the digital and physical worlds. The the barrier between offline and online is increasingly blurred, and consumers seek a frictionless experience between touch points.

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Even in 2011, we had Adidas virtual footwear wall

Connecting the digital and physical worlds isnt a new phenomenon, but increasingly brands are looking to blur the two words for one cohesive experience.

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M&S Endless Aisle

And we saw a virtual shop from Homeplus in South Korea

[Tesco]

A successful brand venture in digital/physical depends on a firm understanding of customer needs and behaviours. Virtual shops where customers are waiting for transport (dead time) fulfills a customer need, making top-up shops convenient by fitting them into an existing point on the journey. 9

35% of UK consumers have used Click and Collect this year

Click and collect is a rising trend that fits with our two focus areas: CX and continuous commerce. Usage of click and collect is on the rise, particularly amongst Millennials (18-34), who are are more willing to click and collect groceries: compared to the general population (46% vs. 34%). 47% UK consumers used Click & Collect last Christmas. Most popular categories included fashion, gadgets, and household tech like TV. Least popular were bulkier items like furniture/kitchenware

Amazon launched collection lockers across London underground stations, Doodle opened up parcel collection stores across 13 UK railway stations, Waitrose chilled food lockers, Asda and Tesco C&C vans and Drive-thru C&C points increase as well as eBays extended partnership with Argos in the UK allowing customers to pick-up goods across 650 stores by the end of the year. (2015 Mintel Trends data)Consumer data to support: 35% of UK consumers have used C&C in the past year and 64% say that they shop more online now due to ease of delivery and returns (Mintel, 2015)

Customer preference for physical store vs. online depends on the nature of the product. We do know, however, that having both makes customer more likely to purchases in some instances

Consumers more likely to purchase when they have access to both online/offline44% UK consumers more likely to purchase online if they can pick up in store 62% UK consumers shoppers more likely to purchase online if they can return in store

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Physical stores convey brand identity and become labs to study consumer behaviour and solicit feedback

In 2014, we saw a number of ecommerce-first businesses expand into the offline realm. Former online pure-play Birchbox, for example, opened its first physical shop in Soho last July, while companies like Bonobos and Warby Parker doubled down on brick-and-mortar by opening even more physical stores in 2014.Google and Amazon are opening stores on high street

We anticipate this trend to continue in 2015. Why?Consumers more likely to purchase when they have access to both online/offline44% UK consumers more likely to purchase online if they can pick up in store 62% UK consumers shoppers more likely to purchase online if they can return in store

For one thing, the majority of overall retail sales are still taking place offline, and ecommerce sites have realized that they need to set up physical shops if they want to gain significant market share. Additionally, the need to provide seamless online to in-store experiences continues to grow, and successfully pulling this off requires both a digital and physical presence.

According to eMarketer, UK social media users say that shopping online lacks the social experiences you get in store. 6/10 UK consumers miss the element of help/advice that comes from in-store shopping.

Amongst UK consumers, in-store still leads as the place where the shopping experience BEGINS.53% in-store36% retailer website5.6% mobile app2.3% contact centre/catalog0.9% social media Ecommerce sites setting up shop offline is, on one hand, good news for the brick-and-mortar realm because it validates the need for physical retail. However, this also means that Main Street is going to get a whole lot more competitive, and traditional brick-and-mortar retailers must step up their game in order to win.

To do this, we predict that merchants will further enrich the in-store experience by offering services on top of stuff. Take for example, Birchboxs Soho location. In addition to playing video tutorials to keep shoppers informed and inspired, the retailer also offers hair, makeup and nail services in its store.Brands that launched exclusively in eCommerce are increasingly opening brick and mortar stores. Physical space offers a way to meet consumer demand, build brand equity, and learn from customer interactions with product.

https://www.vendhq.com/university/retail-trends-and-predictions-2015

Brands that launched exclusively in eCommerce are increasingly opening brick and mortar stores. Physical space offers a way to meet consumer demand, build brand equity, and learn from customer interactions with product.

Warby Parker seemed all digital to begin with, but increasing consumer demand and a strong business case for brick & mortar shops has lead to a growing set of stores across the US. All signs point to intention to stay-the brand has just taken up a 10 year lease in New Yorks SoHo neighborhood opposite the Apple store

Birchbox, the company known for selling subscriptions to beauty product samples by mail, is leveraging physical space to optimise the CX. More than800,000 women subscribe to the companys monthly beauty sample boxes online, so why the physical store? Its a vehicle to express the brand purpose and identity. More importantly, the physical store represents a chance to gather customer and product insight from some of the brands obsessive and devoted customers.The store relies heavily on the brands digital presence: The iPadsplaced aroundthe floor offermore products, reviews, and video tutorials from Birchbox.com. A physical display in the front of the store shows a rotating inventory of the top online sellers, and a large interactive displayin the back allows shoppers to input their attributes (hair type, skin color, age, et cetera) for new product recommendations using their finger.http://fortune.com/2014/07/11/birchbox-soho-store/

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Brands like Warby Parker are leveraging the digital and physical to make the customer experience easy, consistent, and seamless. Its a brand differentiator.

US eyeglass retailer Warby Parker raised $100 million to expand physical store locations and allow consumers to conduct eye exams on mobile phones

Warby Parker seemed all digital to begin with, but increasing consumer demand and a strong business case for brick & mortar shops has lead to a growing set of stores across the US. All signs point to intention to stay-the brand has just taken up a 10 year lease in New Yorks SoHo neighborhood opposite the Apple store12

Brands such as Everlane are leveraging digital tools to enrich the real world customer experience

California-based retailer Everlane has placed snapchat at the heart of their marketing strategy, using it for exclusive product launches, giving a glimpse into company factories, and even company parties.http://www.psfk.com/2015/05/everlane-fashion-retailers-on-snapchat-secret-shops-roi.html13

What is the implication for brands?Every time we consider a consumers buying experience in the real world, we need to consider how digital and physical (and even virtual) can combine to create a really powerful experience across the customer journey.

This is no longer a nice to have - consumers expect it and the best experiences blur the lines.

Customer journeys are critical, and brands should see them as dynamic constructs informed by fresh insights.

Brands need to meet basic standards for a seamless online/offline experience. Of top 50 high street retailers in the UK40% dont have mobile optimized store locators20% dont have transactional mobile site30% dont have iOS or Android app46% dont feature responsive web design44% dont have tablet-optimised sites

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2. Commerce, commerce everywhere

What consumers expectConsumers expect a smooth segue from browsing to buying. Social commerce platforms inspire brand consideration and purchase intent, and brands need to be able to deliver in those moments.

To say that consumers expect an easy experience doesnt mean that commerce cant be social, emotional, or fun. Leading brands are leveraging digital to deliver on rational & emotional needs.

New apps and tools are making it easier to shop from social, but consumer comments asking where can I buy this? on social show that there is still work to be done to make the experience more seamless.

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The return of social commerceIts impossible to write an article about social commerce without referring to the much heralded false dawn that was Facebook Commerce.That failed as it was just bolting a catalogue and a store onto a social network and did not make the actual sales process social. In other words, it was not social commerce.Gideon Lask, Former Head of eCommerce HMV

Continuous Commerce:eCommerce is expected to grow 87% from 2013-2018, while mCommerce is expect to grow 157% (eMarketer/April 2014)In the UK, mobile shopping is growing at nearly 4x the rate of overall online spending (IPSOS/Paypal study)

Social Commerce:In 2014, Commerce orders coming from social media grew 202%. Organic and paid search still dominates, but social media is becoming more and more effective at driving sales

75% of UK consumers have used social networks to make a purchasing decision

Social-driven retail sales & referral traffic are rising at a faster pace than all other online channels 17

Could buy now on social networks go the same way?

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Or does endless browsing now have an end in sight?

If social shopping takes offand theres a good chance that it willusers will be able to enjoy a more seamless shopping experience. The clunky transition from one channel to the next (i.e. social to ecommerce) will be eliminated and purchases will be completed much faster.

According to a piece of US research by Business Insider, the Top 500 retailers earned $3.3 Billion from social shopping in 2014, up 26%. This is well ahead of the ~`6% growth rate for eCommerce.

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We know that of active pinners use Pinterest to plan for the future

Pinterest is about the future 74% of active pinners use Pinterest to plan for future purchases

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Fashion disrupter Net-a-Porter leads the industry with its latest social commerce app.

The Net Set combines the ease & convenience of digital with the emotion and magic of shopping in store.

Social Sharing & comparing can drive purchaseAccording to Bazaar voice, 50% of social purchases in the UK occur within one week of sharing an item on a social site We know that 75% UK consumers have used social to make a purchase decision, but how well set up are brands to facilitate a social shop?

Net-A-Porter, lauded as the main disruptor in the fashion industry, has recently launched new app called The Net Set that combines features of a social app with a simplified, direct Buy now trigger.

Features include browsing a live feed to see whats trending, admire 15 Style Council members and shop along with them, and join style tribes to uncover like-minded user, content, brands and inspiration. Consumers can shop everything direct from app The app makes use of digital technologies such as image recognition and live feed of whats trending based on shopper data, and aims to recreate some of the magic of brick and mortar buying.

Other apps and tools allow consumers to shop as soon as inspiration hits, but brands themselves arent doing enough to simplify purchase.

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Its now so easy to purchase

Amazon Dash suggests that when it comes to retail, sometimes easy beats brilliant

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Retailers will continue to innovate in the delivery space

In their book, The New Rules of Retail, Robin Lewis and Michael Dart brought up an excellent point about modern retail success. According to them, if retailers truly want to provide compelling shopper experiences, they would have to take more control of how their products are manufactured, marketed, and distributed.

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People want home deliveries again

According to Nielsen global research:One quarter of respondents were already ordering grocery products online for home delivery55% are willing to do so in the future14% use an automatic online subscription service54% are willing to consider online subscription services in the future

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What is the implication for brands?If technology makes purchase in the moment so easy, then we need to make it easy as possible to help customers buy the brand.

Only by understanding the customer journey and their needs can we construct relevant purchase triggers.

Buying moments arent limited to the conversion section of the customer journey youll find them if you look hard enough.

Pinterest deserves special attention

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Closing thoughtsRather than just marketing to customers we need to talk about creating best in class consumer experiences for them. Customer-led is the key to retail success

A lot of the technology is available right this moment, brands just havent yet pieced it all together to create a coherent experience

The customer journey is no longer linear in nature-thanks in large part to digital, the process has become lateral. Its up to brands to provide an experience that consistently delivers on customer expectations at the relevant points of the customer journey

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Matt HoltDirector, Digital Strategy at OgilvyOne@MattSocial

Greater Expectations:Engaging the new retail consumer